Studio Monitors

Ok you want to take the plunge and get a set of monitors for your home studio. 

So you run down to your local "Shiny Stuff Center" or "Audio Boutique" and you walk into a room with a wall full of speakers of all shapes and sizes and prices and you begin to spin. In comes the friendly commission hungry salesperson, who normally works in the drum department, who is going to sell you a set of "speakers" as he calls them. 

Studio Monitors (Reference Speakers)- 
When choosing studio monitors for your home studio it's important to know that these monitors are not supposed to provide a rich audio experience, as you would expect from a hi-fi music system. 

Studio monitors are designed to provide an accurate image of whatever sound source you are listening to, so you can hear exactly what is going on in your production. 

When you hear the phrases "flat frequency response" or "uncolored sound", this is what they mean. The speakers tell the "cold hard truth" about your mix. 

Studio monitors are also known as reference speakers, as that is exactly what they should provide. A "reference" sound. And that might be the most important point in choosing studio monitors. How they sound in reference to other sound systems. 
  
Most high-end home "speaker systems" are set up for theoretical flat response in anechoic chambers and other details that impress the hi-fi buffs. And in the real world, most people who are listening (rather than mixing) fiddle with their EQ settings to make the music sound the way they want to hear it. And they rarely sit a three to 5 feet away from both speakers at once as we generally do when mixing. 

Near-field monitors are made to reproduce music in your studio in such a way so that when you hear it sounding good, it will sound good on boom boxes, stereo systems, and truck radios too. This is why an important part of mixing is to test and learn how the sound transfers or translates to other systems- so really get to know your speakers. Believe me, this has great impact on the end result of your mix. 

When you finish a mix, take it and play it on as many different systems that you can; the car, home theater, boom box and the like . Make notes, and understand how what you do in the studio translates on other systems. 

Near-field studio monitors- 
In home recording studios the most common type are Near-field or close-field 
monitors. They are designed to be listened to from about 3 to 5 feet away at with the tweeters, level to your ears. Listening from this distance will make poor room acoustics somewhat less important, but near field refections, comb filtering and room resonance, will effect the sound coming out. Especially if you are siting in a null. 

  
An expression you may come across related to monitoring sound is "sweet spot". This is the spot exactly in the middle between the speakers, where you will hear the full stereo image. It might read in studio monitor descriptions that they have a "large sweet spot". This means that you can move your head around and still be able to hear the full stereo sound. This is also known as a "uniform off-axis response". 
  
Active vs. Passive monitors- 
You also have to choose between active and passive speakers. Active speakers, 
a.k.a.  powered or bi-amplified speakers, have a built in power amplifier inside its casing. 
  
Unpowered/passive monitors do not. Active studio monitors have some advantages over passive ones. They save space, as they don't need that extra amplifier. The amp is matched to the speaker so you don't have to worry about your external amp not matching your speaker frequencies. 
  
 Don't go in thinking you need huge monitors. Most home studios are no bigger then you spare bedroom (about 10x12). For this size room you only need a monitor with a 5.5" base and dome tweeter. 

Also with powered monitors you don't need to worry about matching impedance between the monitors and the amp. 

Buying Monitors- 
You almost have to use published reviews to narrow things down to 2 or 3 
competing systems in your price range, because experienced reviewers have tried the monitors while mixing, whereas any Jo Schmoe with a computer can post "these things sound awesome"...oblivious to whether that sound translates to mixes. Again, the important thing is not do they sound cool, but do they mix well! 

I suggest bringing CDs to the store that you're familiar with, and at least one that "everyone" agrees is well-mixed. Here's a good list: 
Elton John - Goodbye Yellow Brick Road 
The Beatles - White Album 
Red Hot Chili Peppers - Blood Sugar Sex Magik 
The Who - Who's Next 
Traveling Wilburys - Volume 1 

The audio chain should be: CD player, mixer, amp speaker- That's it, no EQ, no processors. 

Assuming that you're listening to monitors that have been well-reviewed for mixing, I'd listen for clarity and shimmer and good bass tones, and I wouldn't want to hear distortion, buzzing, or excess thumping. Make sure you hear good stereo imaging in more than just one tiny "sweet spot"...you don't want to have to keep your head still forever while mixing. Crank it up and turn it down. Good speakers can take the former without flinching (make sure that nothing rattles or buzzes, even at VERY LOUD VOLUMES) and will sound good (although you won't hear everything) at lower volumes too. 

When you hear good monitors, instruments may jump out at you without warning, you may hear subtle things you never heard before, or hair may suddenly grow in strange places on your body. But they won't necessarily make you want to dance, because they don't emphasize frequencies at either end of the spectrum (or the middle, for that matter) the way "listening speakers" tend to do.